Those who invested with Madoff were so blinded by his record of consistently remarkable, above-average investment earnings, their own greed caused them to dodge reality.
"Too good to be true" is a constant in this world.
That said, nobody is ever held accountable in government. Government employees never get fired or thrown in jail even if their incompetence costs victims billions.
I agree with most of what you say but from personal observation I cannot agree that no government employee is ever fired or thrown in jail (for criminal behavior).
In a separate vein I would add the SEC has become a joke. We have now a lap dog. The removal of the up tick rule for short selling, the short selling of shares not borrowed and the lack of oversight of hedge funds has contributed to the melt down of the stock market.
The removal of the SEC and other government regulatory operations from the playing field began when the notion took hold in the Executive Branch that the regulatory government apparatus should be in a cooperative mode with their “clients” both in and outside the government. For example, the various Inspectors General offices which were set up in the late 70’s and which were originally charged with being “junk yard dogs” within their departments have eroded over time into becoming part of the Organizations management. Since this has happened under both parties, neither has the high road. The only way the system works is if those who run any of these departments are independent minded, honest and ethical. In this political climate, Diogenes’ lantern would need an infinite supply of oil to find one.
Vince